EVANS CHIROPRACTIC APPELLANT CROSS APPELLEE v. DEVIN THAUBERGER APPELLEE CROSS APPELLANT

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Court of Appeals of Kentucky.

EVANS CHIROPRACTIC, P.S.C. APPELLANT/CROSS–APPELLEE v. DEVIN J. THAUBERGER APPELLEE/CROSS–APPELLANT

NO. 2009–CA–002287–MR AND NO.2010–CA–000130–MR

Decided: March 09, 2012

BEFORE:  taylor, chief judge;  stumbo, judge;  lambert, Double s SENIOR JUDGE. BRIEFS FOR APPELLANT/CROSS–APPELLEE:  Matthew W. Stein Louisville, Kentucky BRIEF FOR APPELLEE/CROSS–APPELLANT:  David S. Strite Joshua W. Davis Louisville, Kentucky

NOT TO BE PUBLISHED

OPINIONAFFIRMING

Evans Chiropractic, P.S.C. appeals from a judgment of the Jefferson Circuit Court awarding Devin J. Thauberger $17,103.00 in bonuses and back wages.   The claim arose from Thauberger's employment as a chiropractor at Evans Chiropractic.   He filed this breach-of-contract claim alleging that Evans Chiropractic had failed to pay him bonuses owed in February and March 2005, and failed to pay him for eleven days of wages.   The trial court awarded the full amount of bonuses and back wages sought, but denied Thauberger's claim for liquidated damages pursuant to KRS 337.385.   Thauberger has cross-appealed from that denial.   After reviewing the record, we affirm on direct and cross-appeal.

Statement of Facts and Procedural History

Thauberger began working as a chiropractor in the Dixie Highway office of Evans Chiropractic on September 5, 2003.   The parties never signed a formal employment agreement, but at trial it was agreed that Thauberger was initially paid $1,500.00 every two weeks, with that amount increasing to $2,500.00 by the end of his tenure with Evans Chiropractic.   The parties also agreed that Thauberger was to receive a monthly bonus to be calculated on the net income produced by the Dixie Highway office.   However, there was some disagreement as to the methodology to be used in calculating the bonus, and that issue will be further discussed below.

Following Thauberger's departure from Evans Chiropractic, he filed suit against his former employer seeking bonuses that he claimed were owed for the months of February and March 2005, and for unpaid wages.   Thauberger ultimately alleged that the bonuses owed totaled $14,353.00 and the back wages (for eleven days of work) totaled $2,750.00, for a total sum of $17,103.00.   Evans Chiropractic denied owing any money to Thauberger.   After settlement negotiations failed, the parties proceeded to trial.

In a bench trial held on June 12, 2009, Thauberger testified on his own behalf and presented evidence through two other witnesses – Don Black and Brenda Miller.   Miller was a public accountant who had previously done the accounting work for Evans Chiropractic, while Miller was Evans Chiropractic's former business administrator.   Evans Chiropractic did not introduce any evidence and chose only to cross-examine Thauberger's witnesses.   The witnesses' testimonies are summarized as follows:

Dr. Devin J. Thauberger

Thauberger testified that while the parties did not have a formally signed employment agreement, their arrangement with respect to bonuses was memorialized in a document that he referred to as an “Associate Doctor Bonus Agreement.”   He further testified – and Don Black later agreed (albeit with some ambivalence) – that Thauberger's bonus was to be paid in accordance with subsection 2 of this agreement.   That provision states, in relevant part, as follows:

2. Payment for Services.   In exchange for the Services, EVANS will play [Thauberger] $1500.00 EVERY OTHER WEEK ON FRIDAYS PLUS THE FOLLOWING BONUS:  THIRTY (30%) OF CASH COLLECTIONS LESS MONTHLY EXPENSES USING A BASE FOR EXPENSES OF $18,000.00 PER MONTH.   THE BONUS WILL BE CALCULATE [sic] USING THE FOLLING [sic] FORMULA:  GROSS INCOME UP TO $40,000 LESS BASE OF $18,000, LESS ANY EXPENSES EXCEEDING $18,000 PER MONTH.   BONUS WILL BE INCREASE [sic] IN THE FOLLOWING INCREMENTS BASED ON GROSS COLLECTIONS[:] $40,001 TO $50,000 AND [sic] ADDITIONAL 2%[,] $50,001 TO $60,000 AND [sic] ADDITIONAL 2.5%[.]

Thus, Thauberger was generally entitled to a monthly bonus calculated on the net income produced by the Dixie Highway office.   Thauberger testified that he never agreed to a bonus structure that differed from that contained in this provision.

Thauberger further testified that Evans Chiropractic unilaterally decided not to pay his agreed-upon bonuses for February and March 2005 after the Dixie Highway office had an unusually high income in February.   Thauberger testified, using no supporting proof or documentation, that in February 2005 the Dixie Highway office took in $50,100.00 and paid out expenses totaling $32,800.00. Double This left a net profit of $17,300.00.   Per Thauberger's interpretation of the “Associate Doctor Bonus Agreement,” his bonus should have been 34.5% of this amount – or $5,968.50 – since his office had produced over $50,000.00 in gross income for that month. Double

For March 2005, Thauberger testified that the Dixie Highway office took in $59,200.00 in gross receipts and paid out $28,200.00 in expenses.   This left a net profit of $31,000.00.   Thauberger again maintained that his bonus should have been 34.5% of this amount – or $10,695.00.   In sum, Thauberger's total claims amounted to $16,663.50 ($5,968.50 + $ 10,695.00) in unpaid bonuses for February and March 2005.   However, Thauberger subsequently acknowledged that he had been paid $3,000.00 of the unpaid February bonus, which reduced the amount claimed to be owed to $13,663.50.

On cross-examination, Thauberger acknowledged that he had received a number of other checks from Evans Chiropractic that could perhaps be characterized as “bonuses” but that he had not credited those towards the amount he claimed to be owed.   For example, in January 2005 Thauberger received a $1,410.00 check for work visa attorneys' fees, and a $4,972.00 payment was made to the Internal Revenue Service for taxes.   Three additional payments of $1,000.00 each were also made through August 26, 2005.   Thauberger testified that he did not offset these amounts from what he claimed was owed in this lawsuit because he believed that he had been entitled to them in addition to what he was entitled to in this case.

Thauberger additionally testified that his employment with Evans Chiropractic ended on September 12, 2005, and that he was owed $2,750.00 in back wages that had not been paid for his final eleven days of employment.   His final paycheck with Evans was dated August 31, 2005, and covered the pay period from August 15 to August 26, 2005.   Thauberger indicated that while he was originally paid $1,500.00 every two weeks when he first began working for Evans Chiropractic, by the end of his time there that amount had risen to $2,500.00 every two weeks.   On cross-examination, Thauberger denied that his last day of employment was actually September 5, 2005, even though an interrogatory answer he had previously provided listed this date as the point at which his employment with Evans Chiropractic ended.   There was also evidence showing that Thauberger had formed his own business, Thauberger Chiropractic, P.S.C., on September 9, 2005.   In summary, Thauberger's testimony supported a claim that he was owed at least $16,413.50 ($13,663.50 + $2,750.00) in unpaid wages and bonuses. Double

Don Black

Don Black testified that at the time of the subject events he was the accountant for Evans Chiropractic.   He was not an employee of Evans Chiropractic, but he provided payroll and monthly profit and loss statements for Evans and performed other services for Dr. Evans personally.   Black acknowledged that Thauberger had access to the Dixie Highway office's financial records while he was employed there.   Black also admitted that no written agreement between the parties was ever signed, but he ultimately acknowledged –with some subsequent ambivalence – that Thauberger generally received bonuses in accordance with subsection 2 of the aforementioned “Associate Doctor Bonus Agreement” and that this provision was an attempt to set forth the manner in which the monthly bonus to be paid to Thauberger was to be calculated.

Black testified that he had reviewed Evans Chiropractic's accounting spreadsheets for the months of February and March 2005 on the night prior to trial.   Without providing any supporting proof or documentation, Black testified that the Dixie Highway office took in gross receipts of approximately $50,000.00 in February 2005 and paid out approximately $22,000.00 in expenses that month.   He further testified that the Dixie Highway office took in gross receipts of approximately $58,000.00 in March 2005 and paid out between $23,000.00 and $24,000.00 in expenses.   Thus, Black's recollection of the Dixie Highway office's expenses for those months was higher than that of Thauberger's.

Black also interpreted subsection 2 of the “Associate Doctor Bonus Agreement” differently than Thauberger, and his testimony as to how bonuses were to be calculated was somewhat confusing.   Black initially suggested that instead of Thauberger's being entitled to 34.5% of the total net income in any month where gross receipts exceeded $50,000.00, he was instead only entitled to receive 30% of the net income up to $40,000.00, plus an additional 32.5% of the remaining net proceeds.   However, Black then indicated that for February 2005, Thauberger was entitled to 30% of $28,000.00 (the total net income per Black's testimony) – or $8,400.00 – plus 2.5% of $10,000.00 – or $250.00. Double This resulted in a total of $8,650.00 in bonus money owed for that month.   However, Black further testified that Thauberger's February 2005 bonus should be reduced by at least $3,000.00 in order to give Evans Chiropractic credit for advances that Thauberger had received and for the increase in his base salary.

As for March 2005, Black testified that based, on a net income of $34,000.00 for that month, Thauberger would have been entitled to 30% of that amount – or $10,200.00 – along with 2.5% of 10,000.00 – or $250.00.   Per Black's reasoning, this would result in a total of $10,450.00 owed for that month.   However, Black testified that Evans Chiropractic should have “back[ed] out” $2,500.00 from any bonus due that month because of an additional pay period that had resulted in Thauberger's being paid $7,500.00 in salary in March.

Black further testified that it was Evans Chiropractic's “practice” to deduct any losses produced by the Dixie Highway office in other months from the bonus that Thauberger was to receive in a month producing net income.   He specifically pointed to an alleged $5,800.00 loss in January 2005 that had allegedly been deducted and recouped from any bonus owed in February.   Black also noted that losses in April and May 2005 were taken into account in computing Thauberger's bonus.   Black indicated that in total, Thauberger was owed approximately $10,500.00 in bonuses for the months of January through May 2005 but part of that amount had been paid.   He also indicated that Thauberger had never given Evans Chiropractic “credit” (for purposes of this case) for the expenses and extra money paid to him.

However, Black acknowledged that it was unclear if the “Associate Doctor Bonus Agreement” explicitly allowed losses from other months to be offset from bonuses earned in a particular month, and he further admitted that he was not entirely sure that it did.   Thauberger's position is that such an offset was not allowed.   Black was then shown an “Independent Contractor Agreement” that was dated March 25, 2005.   This document had also not been signed by either party, but it would have allowed for the offset referenced above.   However, Black noted that this contract had been drawn up by someone else and he did not recall ever seeing it before.

Brenda Miller

Miller testified that she had been the business administrator for Evans Chiropractic for thirteen years, including much of the time Thauberger was employed there.   She indicated (again without supporting documentation) that for February 2005, the Dixie Highway office's gross receipts totaled between $52,000.00 and $53,000.00 and the overhead for that month ran between $23,000.00 and $24,000.00.   She further indicated that the gross receipts for March 2005 totaled somewhere around $57,000.00 to $59,000.00, with the expenses for that month being approximately the same as for February.

Miller testified that Thauberger's pay and bonuses were governed by the terms of the “Associate Doctor Bonus Agreement.”   As such, she agreed that Thauberger was entitled to receive a monthly bonus that was a percentage of the net income taken in by the Dixie Highway office each month, but she had no knowledge of any amounts Thauberger was owed in connection with this lawsuit since she left Evans Chiropractic in April 2005.

The trial court found that the parties had an employment agreement and that they operated under the aforementioned terms of the “Associate Doctor Bonus Agreement” for purposes of paying Thauberger a monthly bonus and salary.   Thus, the parties had come to a “meeting of the minds” on the issues of compensation and bonuses.   The court further found that Thauberger had rendered services for which he was entitled to be paid.   The court then awarded Thauberger the total amount of $17,103.00 in bonuses and wages that he was claiming but denied his KRS 337.385 claim for liquidated damages.   In so doing, the court noted that “[w]hile Thauberger's and his witnesses' testimony regarding office expenses and collections could be considered speculative, Evans failed to introduce any evidence to the contrary of their assertions.”   Evans Chiropractic now appeals from the trial court's award of damages, while Thauberger cross-appeals from the court's rejection of his claim for liquidated damages.

Discussion

No.2009–CA–002287–MR

On appeal, Evans Chiropractic primarily claims that the trial court's award of damages must be reversed because the findings supporting it were based upon speculation and conjecture.   Since the trial judge sat without a jury and heard the evidence, his findings may not be set aside unless they are clearly erroneous, and we must give due regard to the opportunity of the trial judge to consider the credibility of the witnesses.  Lawson v. Loid, 896 S.W.2d 1, 3 (Ky.1995);  Kentucky Rules of Civil Procedure (CR) 52.01.  “A factual finding is not clearly erroneous if it is supported by substantial evidence.   However, a reviewing court is not bound by the trial court's decision on questions of law.   An appellate court reviews the application of the law to the facts, and the appropriate legal standard is de novo.”  Jones v. Sparks, 297 S.W.3d 73, 76 (Ky.App.2009) (internal citations omitted).  “The test for substantiality of evidence is whether when taken alone, or in the light of all the evidence, it has sufficient probative value to induce conviction in the minds of reasonable men.”  Janakakis–Kostun v. Janakakis, 6 S.W.3d 843, 852 (Ky.App.1999).   Mere doubt as to the correctness of a finding does not justify reversal of a trial court.  Moore v. Asente, 110 S.W.3d 336, 354 (Ky.2003).

Following these standards, we are compelled to conclude that the trial court's award of bonuses and back wages to Thauberger is generally supported by substantial evidence.   Evans Chiropractic's assertions to the contrary notwithstanding, the record reflects indisputably that Thauberger and Evans Chiropractic had an employment agreement that entitled Thauberger to monthly bonuses based upon the net income produced by the Dixie Highway office.   Thus, the primary questions left to the trial court to determine were whether Thauberger was entitled to unpaid bonuses for a breach of that agreement and to what extent.

Evans Chiropractic contends that Thauberger's claim should have been dismissed at the close of evidence because he presented conflicting accounts of what he was owed and different bases for computing those amounts.   Evans argues that this rendered Thauberger's claim of damages entirely speculative, thereby meriting dismissal.

Evans Chiropractic relies primarily upon the so-called “equal probability rule” in support of its argument.   Under the “equal probability rule,” the “kind of speculation that is not allowable occurs when the probabilities of an event's having happened in one or two or more ways are equal and there is no evidence as to which way it happened.”  Schuster v. Steedley, 406 S.W.2d 387, 390 (Ky.1966) (emphasis added).   This is not a case in which “no evidence” was presented as to what wages and bonuses were owed to Thauberger.   Thus, the “equal probability rule” is inapplicable here.   In a perfect world Thauberger and his witnesses would have presented consistent testimony fully documented with spreadsheets, etc., showing the expenses and income of the Dixie Highway office.   However, Thauberger testified that while he was working for Evans Chiropractic, he had access to the financial records of the Dixie Highway office and that he had familiarized himself with those records.   As such, there was a foundation for his testimony.   Ultimately, all three witnesses provided substantially consistent testimony on this issue that the trial court was free to accept or reject as it saw fit.   We are not at liberty to second-guess the court in that regard. Double

We also note that the inconsistencies or conflicts in the evidence in this case related to the amount of money owed to Thauberger and the manner of calculation.   While it is true “that damages must always be proven with reasonable certainty ․ where it is reasonably certain that damage has resulted, mere uncertainty as to the amount does not preclude one's right of recovery or prevent a jury decision awarding damages.”  Curry v. Bennett, 301 S.W.3d 502, 506 (Ky.App.2009) (internal citations omitted);  see also Charash v. Johnson, 43 S.W.3d 274, 280 (Ky.App.2000).   The fact of minor discrepancies in the evidence as to what Thauberger is owed was not enough to merit reversal of this case.

We further note that any confusion in this regard seems to have arisen largely because Thauberger and Black gave different accounts as to the methodology to be used in calculating Thauberger's bonus.   However, subsection 2 of the “Associate Doctor Bonus Agreement” appears to support Thauberger's account or, at the very least, it is ambiguous as to the matter.   A contractual provision is ambiguous if it is susceptible to multiple or inconsistent interpretations.  Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 105 (Ky.2003).  “Courts in this state have long held that ‘when a contract is susceptible of two meanings, it will be construed strongest against the party who drafted and prepared it.’ ”  Spurlock v. Begley, 308 S.W.3d 657, 660 (Ky.2010), quoting B. Perini & Sons v. Southern Ry. Co., 239 S.W.2d 964, 966 (Ky.1951) (internal citation omitted).   Here, Don Black testified that he prepared the “Associate Doctor Bonus Agreement” containing the bonus provision in question.   Since Black was working for Evans Chiropractic when he did so, this provision must be construed against Evans.   Thus, the trial court did not err in applying the bonus formula asserted by Thauberger.

Evans Chiropractic finally argues that reversible error exists because neither Thauberger nor the trial court “credited” bonuses or other money paid on Thauberger's behalf against the amount claimed as damages.   As noted above, Thauberger acknowledged that he had received a number of other checks from Evans Chiropractic but that he had not credited those towards the amount he claimed to be owed.   For example, in January 2005, Thauberger received a $1,410.00 check for work visa attorneys' fees, and a $4,972.00 payment was made to the Internal Revenue Service for taxes.   Three additional payments of $1,000.00 each were also made through August 26, 2005.   However, Thauberger testified that he did not offset these amounts from what he claimed was owed in this lawsuit – largely because he believed that he had been entitled to them in addition to what he was entitled to in this case.

This issue was not developed to a considerable extent at trial.   Indeed, the trial court failed to make any factual findings regarding it and Evans Chiropractic filed no subsequent motion requesting further findings.   Because of this, we are unable to consider this particular issue since we cannot weigh the evidence and decide factual matters de novo.   See Transp.   Cabinet v. Caudill, 278 S.W.3d 643, 648 (Ky.App.2009).

No.2010–CA–000130–MR

On cross-appeal, Thauberger argues that the trial court erred by failing to award him liquidated damages in an amount equal to the wages and bonuses withheld by Evans Chiropractic, plus costs and attorneys' fees, because Evans Chiropractic had failed to withhold that amount in good faith.   Because of this failure, he argues that such an award was merited pursuant to KRS 337.385.   In response, Evans Chiropractic argues that Thauberger was not an “employee” for purposes of that statute but was instead an independent contractor.   Therefore, he is not entitled to an award of liquidated damages.

The trial court denied Thauberger's request for liquidated damages but provided no grounds for its decision.   Moreover, Thauberger filed no motion requesting additional factual findings on these issues.   The question of whether a party acted in good or bad faith is inherently a factual one.   Consequently, because no factual findings were made, we are unable to consider Thauberger's cross-appeal since we cannot weigh the evidence and decide factual matters de novo. Double See Caudill, 278 S.W.3d at 648.   Therefore, we are compelled to reject Thauberger's cross-appeal and to affirm the trial court's denial of his claim for liquidated damages.

Conclusion

For the foregoing reasons, this Court affirms as to both appeals.

STUMBO, JUDGE, CONCURS.

TAYLOR, CHIEF JUDGE, DISSENTS.

LAMBERT, SENIOR JUDGE: